The EU’s labeling of natural gas as “green” presents new opportunities for gas-producing developing countries thus, the government needs to act strategically in order to shore investments into its gas resources to accelerate the country’s development.
Natural gas has been chosen as the nation’s transition fuel. This is due to its low cost and relatively low carbon emissions compared to crude. Natural gas production also wields greater prospects in terms of ensuring the country’s energy security and accelerating national development.
While the recent geopolitical crisis has created a wedge between countries especially EU countries and Russia, this has also had serious economic implications on vulnerable countries in Africa.
With Russia’s decision to completely cut-off gas supply to the EU, this will worsen the energy crisis inflicted by the war on the EU and countries across the world. The compounding effect of these, has forced the EU to make a U-turn on the importance of natural gas and nuclear energy as important in the transition to a low-carbon economy.
Therefore, this underscores the need for Ghana to focus on developing its domestic gas assets, which urgently require investments.
Ghana’s Natural Gas Resources
The domestic sources of gas come from the Jubilee and TEN fields, operated by Tullow Ghana Ltd, and Eni’s Sankofa Gye Nyame (SGN) field. Ghana started full commercial natural gas production at the Jubilee field in 2014 and produced approximately 23 billion cubic feet (Bcf) in 2016, according to national energy statistics.
The SGN field has been supplying about 210mmscfd of gas, significantly above the take or pay commitment of 159mmscfd. The existing infrastructure on the field also has an estimated capacity of about 260mmscfd without additional investment, providing an extra volume of 50mmscfd from SGN. Again, other discoveries in the area, such as the Akoma and Afina discoveries, require investment for appraisal and possible tie-in to the FPSO J. A. Kufuor.
Recently, Tullow Ghana confirmed the discovery of a new gas reserve, estimated to hold between 1.5 and two trillion cubic feet (TCF) of the hydrocarbons offshore Cape Three Points in the Western Region. The new non-associated gas reserve is located within the Tweneboa, Enyenra, Ntomme (TEN) and the Jubilee fields.
Over the past years, Ghana’s own investment into its gas resources has been minimal. Though in recent times, investments into the oil and gas sector has been dwindling due to the EU’s previously unwavering stance on the use of renewable energy, the country also shares the blame for its underutilized gas reserves.
EU Parliament Plays Poverty Card to Support Label
The decision to label natural gas as “green” was announced by the European Parliament on Wednesday, July 6, 2022, as countries voted in favor of a proposal regarding labeling natural gas and nuclear power plants as climate-friendly investments. A move which will potentially open up billions of euros in fresh funding.
The European Commission released the proposal, formally called the EU taxonomy, in December 2021, as a list of economic activities that investors can label and market as green in the EU. Out of 639 lawmakers present, 328 opposed a motion that sought to block the EU gas and nuclear proposals.
Among proponents of the proposal, this “would result in a situation where the poor would only get poorer,” Bogdan Rzonca, a Polish member of the European parliament said in a debate during deliberations.
Moreover, defenders of the plan argue that the war has heightened the need for rapid investment in the infrastructure required to import gas from places other than Russia. This will spur a surge of investment in infrastructure such as new gas pipelines or facilities for the import of liquefied natural gas.
With the EU playing the poverty card, this means that, Ghana could make a strong case in using its natural gas to root out energy poverty and accelerate development to lift millions out of poverty. However, the government needs to be strategic in order to make necessary gains from this development.
READ ALSO: Public Sector Workers Union Urges Government to Cushion Workers
